However, as mentioned on DailyFX on Demand, a weaker-than-expected GDP print may trigger a sharp selloff in the AUDUSD as it puts increased pressure on the Reserve Bank of Australia (RBA) to revert back its easing cycle, and we may see Governor Glenn Stevens take a more aggressive approach in talking down the higher-yielding currency in an effort to further assist with the rebalancing of the $1T economy.

Expectations: Bullish Argument/Scenario

Release

Expected

Actual

HIA New Home Sales (MoM) (JAN)

--

0.5%

Building Approvals (MoM) (JAN)

0.5%

6.8%

Trade Balance (DEC)

-200M

468M

The pickup in global trade paired with the ongoing expansion in the housing market may have propped up the growth rate during the last three-months of 2013, and a positive result may spur a bullish reaction in the AUDUSD as it limits the risk of seeing the RBA implement another rate cut later this year.

Risk: Bearish Argument/Scenario

Release

Expected

Actual

Company Operating Profits (QoQ) (4Q)

2.0%

1.7%

Private Capital Expenditure (4Q)

-1.3%

-5.2%

Unemployment Rate (JAN)

5.9%

6.0%

However, higher unemployment along with the drop in business investments may lead to a dismal GDP report, and a further slowdown in the growth rate may heighten the bearish sentiment surrounding the Australian dollar as it raises the central bank’s scope to implement additional monetary support over the coming months.

Impact that the Australian GDP report has had on AUD during the last quarter

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

3Q 2013

12/04/2013 00:30 GMT

0.7%

0.6%

-78

-105

3Q 2013 Australia Gross Domestic Product

The Australian economy grew 0.6% in the third-quarter following a revised 0.7% rise during the three-months through June, and the persistent slack in the $1T economy may push the RBA to carry out its easing cycle in 2014 in order to encourage a stronger recovery. The Australian dollar struggled to hold its ground following the dismal GDP report, with the AUUDSD slipping below the 0.9100 handle, and the higher-yielding currency continued to weaken throughout the day as the pair closed at 0.9026.